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Dear Terry,
Is there anything to beware of when it comes to gap insurance coverage?
-- Steven
Dear Steven,
Gap insurance usually comes into play on a leased vehicle. It's supplemental insurance to cover the difference between
what a vehicle is worth and what is owed in the event the leased vehicle is totaled in a crash or is stolen and not
recovered. The cost is usually a part of the lease.
On conventional loans, some insurance companies offer a form of gap insurance that will do the same
thing as lease gap insurance, but usually it comes with an increased premium.
Check into whether there is any
deductible involved and whether you would be entitled
to recover your down payment. Otherwise, since
most cars these days are carrying negative equity
for three or more years, gap insurance can be
a prudent addition.
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